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The fatal flaws of the Dungeness Water Rule

The comment period on the proposed Dungeness Water Rule is now open and will remain so until July 9.

The rule is extraordinarily important. It represents the culmination of the Department of Ecology's long and arduous effort to preserve and to perhaps increase the flow of water in the Dungeness River and other streams in the watershed. Doing so would ensure in perpetuity the health of the fish and the other wildlife that rely on these streams.

It also would preserve the esthetic value of these waterways, an important consideration for those of us who live here and for those who visit.

The rule is also important because of the impact it will have on development within WRIA 18 East, which includes much of rural eastern Clallam County. Those who purchase land would be required to purchase water rights; those who now live there also would be required to purchase water rights if they establish a "new use" for the water they have been withdrawing from an existing well.

The rule is also extraordinarily complex. Explaining it in simple terms is very difficult. Unfortunately, the task is made more difficult by the many flawed assumptions that underlie the rule's internal logic; the strategies that grow out of these assumptions are also unsound.

Here are three of the many flaws in the rule:

1) The rule was proposed to respond to a specific issue. Ecology says water rights in WRIA 18 East are over-allocated. That is, more rights have been issued than there is water.

Unfortunately, Ecology doesn't know the volume of rights that are currently in force. Local Realtor Marguerite Glover has repeatedly made the point that "many water rights have been relinquished, from the Dungeness River, Matriotti Creek, Siebert Creek, Casselary Creek, and more."

She adds, "In addition, the Water Users' Association (Irrigators) use far less water than they did in the past."

Glover concludes, "The Dungeness Watershed is not over-allocated (except on paper). There is no reason to close this basin."

Is Glover correct in saying the watershed isn't over-allocated? Ecology doesn't know, but is closing the basin anyway.

Further, the local Indian tribes also have treaty rights to fish in the various streams. This creates what is called a "presumed right to water."

Unfortunately, the amount of this "presumed right" is undefined. The new rule attempts to address this (and certain statutory requirements) by creating what is known as "in-stream flows," which are defined as the amount of water needed to best ensure the health of the fish and the other human and ecological systems that rely on the Dungeness River and the various streams.

The rule would establish in-stream flows that are greater than the amount of water that is consistently found in the various smaller streams. The instream flow for the Dungeness River is greater than the natural flow for most of the year.

Because nature provides too little water, the rule would ban "new uses" of water in all of the stream sub-basins year-round and in the Dungeness River area for most of the year.

2) To create the cost-benefit analysis for the new rule, Ecology relied on the opinion of Stephen North, a Washington Assistant Attorney General who declared those who purchase property within WRIA 18 only have a "presumptive right" to free water.

The purchaser, he said, doesn't have an "active right" until the well has been drilled and water from it has been used.

Therefore, he said, removing this right to "free water" has no impact on the value of the property. Senior Ecology officials agree.

They are wrong.

The legal opinion is correct: The right doesn't exist until it is secured through use.

But an "assumed right" — which is a less formal way of stating this — has value.

Economics 101: All value is assumed.

When you purchase a new car you assume it's going to have an engine — and you pay commensurately.

If you purchased a piece of land within WRIA 18 today you would assume you would be allowed to draw water, not least because that right is found in state statute.

You would pay commensurately.

Ecology says after the rule is imposed you would pay the same for the land because the right to free water was only assumed, not active.

Nonsense.

In e-mails to his agency superiors, Tryg Hoff, the agency economist first assigned to write the cost-benefit analysis for the rule, repeatedly pointed out that this hopelessly flawed argument was accepted by Ecology leaders only because it was expedient: if the lost value of the land within the basin is included in the rule's cost-benefit analysis the scales would tip. The costs of the rule would far exceed the value of the benefits.

Washington law says the benefits of a new rule must exceed its costs.

3) Ecology says buyers will pay the same amount for a piece of land with or without water rights. If no rights are provided, they will happily purchase the rights later.

Unfortunately, Ecology has no water rights to sell — or none to speak of.

The rule is based on an assumption that water rights will be made available for purchase by landowners once the rule is in place.

"The market" is supposed to supply these rights.

Until the market develops, Ecology will provide "reserve water." This isn't surplus water. It is water that Ecology has simply declared can be drawn from wells while a newly established "water bank" seeks water rights.

The reserves are intended to ensure development doesn't come to an immediate halt.

The reserve water is limited. And it isn't free.

Ecology assumes it will use water rights sold by the Dungeness Water Users Association to provide the vast majority of the needed water rights. An association spokesman has said they plan sell up to five cubic feet per second of water to meet these needs.

But the rule will almost certainly be in place before the water rights have been obtained.

With the rule in place, the members of the association will find themselves in a unique position: for all practical purposes they are the sole source of water for WRIA 18 East, which the rule will have largely closed to future development unless water can be found.

As they continue to negotiate the price of the water, the members of the association will ask themselves: "How much is our water worth?"

In the rule's cost-benefit analysis Ecology has declared the value of lost development in the area would cost taxpayers between $19.1 million and $62.1 million. The association can't provide all the water needed to avoid this catastrophe, but it can provide the vast majority of it. And there are no other sources within sight.

Given that documented scenario, what is the value of the water?

The association's members will hold the future of the watershed in their hands. Ecology will have handed it to them.

The people of Clallam County will have no choice but to hope the Water Users charge less for the water — much less — than its Ecology-documented value.

The question naturally arises: Why should they? They're in business. They seek profits. That isn't a criticism; that's what they should do.

Can this happen? Yes. In fact it has happened.

Bill Clarke, an attorney with experience in water law, recently pointed out that "in Kittitas, Ecology created a new market for mitigation water rights by prohibiting new exempt wells, and this gave significant value to water rights already in the trust water program from Suncadia, and created a new market for for-profit water banks.

"A risk in Dungeness is that since there seems to be only one mitigation 'seller,' that seller could wait until the reserves are eliminated before seeing what buyers are willing to pay.

Remember the saying, 'You'll know the worth of water when the well runs dry.'"

We don't believe in pointing out problems unless we also can offer a solution. To wit:

Ecology must halt in its plan to put this rule into place. Too often rigorous environmental controls are put into place simply because "rigorous environmental controls" are popular. They don't undergo the kind of close, skeptical scrutiny that other laws are subject to.

This rule will have too great an impact on our local economy to allow that to happen.

The agency is in a headlong rush to get this completed.

That's a bad idea. They need to start over by 1) creating an exact inventory of the water rights in force in WRIA 18 East and 2) negotiating with the tribes reasonable, not optimal, "water rights for the fish."

If this rule goes through in its current form, the results will be very harsh for eastern Clallam County. We can then blame Gov. Christine Gregoire and her administration for the rule — for the three or four months that she remains in office after the rule is in place. Then she goes away.

Reps. Kevin Van De Wege and Sen. Jim Hargrove still will be in office. Rep. Steve Tharinger will be facing a challenger this fall.

If they don't speak up now regarding the flaws in this rule, they should hear from the voters.

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